NEW YORK (The Deal) -- U.K. engineering group IMI plc said Wednesday, Oct. 16, it had agreed to sell two consumer-oriented businesses to Berkshire Hathaway Inc.'s (BRK.B) Marmon Group LLC for $1.1 billion as it hones its focus on industrial flow-control products and systems.
Marmon is to buy IMI's beverage dispense unit, which supplies cooling and dispensing systems to drinks makers and retailers, and had 2012 revenue of £313 million ($502 million) and profit of £45 million. It is also buying IMI's merchandising division, which had 2012 revenue of £183 million and profit of £27.9 million.
The Chicago company stepped forward with an offer for both divisions after IMI in March said it may sell most of its merchandising unit. IMI plans to return £620 million of the proceeds to shareholders and contribute £70 million to its U.K. pension fund.
The transaction "positions IMI as a highly differentiated, market leading flow control business focused entirely on industrial end markets," said IMI CEO Martin Lamb in a statement, noting that "structural" trends including climate change and urbanization should aid growth in that sector.Marmon comprises three largely independently managed companies, which between them own about 150 manufacturing and services businesses. The three Marmon companies are: Marmon Engineered Industrial & Metal Components Inc.; Marmon Natural Resource & Transportation Services Inc. and Marmon Retail & End User Technologies Inc. Their consultancy and administrative services are supplied by the Chicago central office, which Marmon insists is not a conventional headquarters. The group had more than $7.16 billion in revenue in 2012. Its recent acquisitions include the June purchase of the assets of Lindenau Fahrzeubau GmbH, a German tank fabricator, depot and repair facility, and the acquisition in September 2012 of Tarco Steel Inc. and Metal Fab LLC, of Binghamton, N.Y. Warren Buffett's Berkshire Hathaway bought Marmon for $4.5 billion in March 2008 from the founding Pritzker family. The price Marmon will pay for the IMI businesses is subject to adjustments on completion, which the companies expect to take place in early 2014. IMI needs shareholder approval to return the cash proceeds. That initiative comes on top of a share buyback program at IMI covering £175 million of shares which will run until March 2014. Shares in Birmingham, England-based IMI were up 29 pence at 1,528 pence by mid-morning in London, valuing the company at about £4.8 billion. Robert W. Baird & Co. advised IMI on the sale. Written by Laura Board
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV